How Fundamentals Predict Profits—and Losses

April 2, 2009

6. Royal Bank of Scotland (RBS)

A close second for the worst financial stock is the Royal Bank of Scotland (RBS), which has essentially been nationalized by Britain.

7. Hitachi (HIT)

Consumer spending has really cut into Hitachi (HIT) and the company’s bottom line. Since Hitachi traffics in big-ticket items like plasma TVs to mobile phones to refrigerators, it has not weathered to economic downturn well at all.

8. Panasonic (PC)

Similar problems have erased profits at Panasonic (PC) as consumers delay purchasing big electronics items.

9. Dow Chemical (DOW)

Dow Chemical (DOW) sells chemicals, plastics and other specialized products and services worldwide. Orders have dried up in nearly every segment of business, but most notably in its automotive plastics division.

10. Allstate (ALL)

Allstate (ALL) is not in good hands at all. The company was expected to post earnings of 72 cents in the third quarter, but instead posted a 35-cent loss for a -150% earnings surprise. The company also missed forecasts for the fourth quarter and is not looking good for its next report at the end of April.

There you have it. I strongly advise investors sell these stocks NOW even if it means taking a loss, because more trouble is yet to come for all these picks. No stock, no matter how big or iconic the name, is guaranteed to make you money. Only by following the facts and fundamentals of a company can you be sure your investment is safe.

To get my complete list of 100 Big-Name Blue Chip Stocks to Sell Now, sign up for Blue Chip Growth today for just $99.

Finding Better Stocks

You may hear a lot of bluster about how many companies are facing rather bleak bottom lines. But don’t be fooled into thinking that every company is losing money. This earnings season, the stocks that report the best sales growth and profit growth will see big buying pressure as investors come running with cash in hand.

This “flight to quality” is going define Wall Street in the coming weeks now that we’ve seen some stability in the stock market. When the buyers return, they will only seek out fundamentally strong companies that have the numbers to prove they are safe investments. This strategy is nothing new to my Blue Chip Growth subscribers, who have beaten the market 6-to-1 for 11 years by seeking out strong stocks with strong earnings, and I expect another great run for us this earnings season.

There is one stock I highlighted in my recent April issue of Blue Chip Growth as the best company to buy right now. This company is headquartered in Boston, but operates about 22,500 broadcast and communications towers in Brazil, Mexico and the U.S. The company is none other than American Tower Corporation (AMT). Since Mar. 31, AMT is up about 10%!

To find out more details about this stock and two dozen others that I expect to soar in the next several months, sign up today for six months of Blue Chip Growth for just $99. This limited-time offer is backed by a 100% money-back guarantee.

A Look Ahead: Special Three-Part Earnings Series

I can’t overstate the importance of quarterly earnings season, so that’s why I’m working on an important three-part series for you. In each issue, I’ll explain a different fundamental factor and why it’s an important indicator of future performance. I’ll also offer up a recap of stocks that reported excellent earnings and are strong buys, and a list of duds that are hurting after a lackluster quarterly performance.

Stay tuned for this valuable series. I truly believe that with the knowledge of how to spot the next earnings winners, you can growth your wealth year after year. Until then, don’t forget to stay apprised of the latest news and market events via my Top Story articles and my Market Blog.

 I’ll talk to you soon!

Sincerely,

Louis Navellier